Wisynco reports $1.2b half-year profit despite weather effects

In its first financial report as a listed company, Wisynco Group Limited reported half-year profit of $1.22 billion for the period ending December 2017, or 34 cents per share, after a period of restructuring in which the company hived off its non-core businesses as it prepared to go public.

Chairman William Mahfood says the company performed ahead of last year in the second quarter despite adverse weather conditions. Profit for the quarter amounted to $578 million, up 23 per cent from $470 million in the 2016 period. Earnings per share rose from 13 cents to 16 cents.

"We're very pleased with the performance for the quarter. Indeed, we were ahead of last year by a good margin, but the reality is that the rains we had for that quarter impacted our customers' business significantly," he said, in reference to the damper on sales by the rainy weather.

Sales at the manufacturing and distribution company topped $12.2 billion at half-year, split at just over $6 billion in each quarter. Revenue rose by $1.67 billion in the six-month period or nearly 16 per cent year-on-year.

NON-CORE BUSINESS TRANSFER

Wisynco Group listed on the Jamaica Stock Exchange at the end of December following a $6-billion initial public offering of its shares. Two months before that, the company got approval for a new scheme of arrangement from the tax authorities under which it transferred three non-core operations to its ultimate parent.

Those transfers, valued at around $1 billion net, according to the company's second-quarter disclosures this week, included Wisynco Foods Limited, under which the company operated its restaurant businesses; Seville Development Limited, through which it holds undeveloped lands; and Fusion Limited, which is the face of the juice distribution partnership with Trade Winds Limited.

They now fall under Wisynco Group (Caribbean) Limited, which itself owns 77 per cent of Wisynco Group Limited.

Mahfood says the disclosure of the restructuring upheld a commitment to give clear information to the market.

"This was in keeping with our undertaking in our prospectus prior to listing ... the note would reflect in the results so that you're comparing apples with apples that is to say, you are comparing the financial results of the group post-restructuring in the second year," the chairman said.

Profit from discontinued operations, as a result of the restructuring, amounted to $8.2 million in the second quarter and $41 million over six months.

Mahfood said the company, which is still spending on recovery and restitution from the May 2016 fire, says those expenses should be behind it by the end of its financial year in June 2018, and that the focus now is on cost containment.

"We do have some areas of cost control that we have to focus on as we try to settle down once more in the new facility. That will certainly occupy our attention for the rest of the year," he said.

The construction of cold-storage facilities, announced last year as part of the overall recovery programme, has also been delayed due to the rains over the summer and into fall.

That project, which is part of a $2-billion expenditure programme, is ongoing. Mahfood said the lack of a centralised cold storage is a logistical challenge and cost issue for Wisynco, as the operations for chilled products are currently spread across three different locations.

Wisynco expects to finalise the project during its fourth quarter.

Currently, the value of the company's fixed assets has grown to $5 billion, up from $3.7 billion the previous year amid the recovery. Wisynco reported total assets of $13.4 billion at December, of which $3.3 billion is held in cash and short-term deposits.

Wisynco, which listed on the market at $7.87, is now trading at $10.51 per share, valuing the company at $39.4 billion.